Secretary of the Treasury Steven Mnuchin. Photo by Office of the President Elect.

Mnuchin Warns Government Could Hit Debt Ceiling by September

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In a letter sent on Friday to Speaker of the House, Nancy Pelosi (D-CA), Treasury Secretary Steven Mnuchin warned that “based on updated projections, there is a scenario,” in which the Federal Government runs, “out of cash in early September.”

While Mnuchin acknowledges that “there is a reasonable uncertainty in projecting government cash flow,” he also urges Congress to increase the debt ceiling, before Congress adjourns for summer recess in August.

The Wall Street Journal reported that the Bipartisan Policy Center (BPC), who in May had suggested that the Government could run out of funds to pay it’s bills in October or November, said Monday, that the Government’s ability to pay it’s bills could hit in early September.

BPC’s Director of Economic Policy Shai Akabas, said in a statement that while the latest data shows the “X-Date”, when the government runs out of funds hits early September, they are still predicting the “X-Date,” remains early October, however he cautions uncertainty is high.

Even though our projection continues to show that the most likely timing of the ‘X Date’ remains early October, uncertainty is high, and it would be reckless for policymakers to run the risk of default by failing to deal with the debt limit in advance of the August recess.

BPC Economic Director via press release.

On Thursday evening the Washington Post reported that Pelosi “will attempt to finalize a deal that would raise the debt ceiling in the next few weeks instead of delaying until fall.”

Pelosi told reporters that she would like to raise the debt ceiling as part of a package deal that would set spending levels for the next two years.

The New York Times reports that Mnuchin and Pelosi “have spoken by phone multiple times this week, including a 20-minute conversation on Friday afternoon, about federal spending caps and raising the debt ceiling to prevent government wide spending cuts. They agreed that they would most likely speak again over the weekend, according to a Democratic leadership aide.”

The Hill reports that GOP Senators told them, there is little desire “in their conference to vote on a standalone proposal to increase the nation’s debt limit, something that’s broadly unpopular with the base.”

An Adviser to Senator Majority Leader Mitch McConnell (R-KY), Senator from Texas John Cornyn (R), explained that it would be hard to reach the sixty votes needed to get the debt ceiling raised with addressing spending when Congress resumes in September.

It’s going to be very hard. I don’t know where the 60 votes would be to get it done, just by itself.

Senator Cornyn via The Hill.

Pelosi was asked during her weekly press conference on Thursday about raising the debt ceiling, to which according to the transcript she said, “Well, we’ll just see. I mean, obviously, we don’t want there to be any doubt about the full faith and credit of the United States of America. The Constitution guarantees that, and we always have supported that.”